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TMI Blog2023 (4) TMI 1080X X X X Extracts X X X X X X X X Extracts X X X X ..... r, had admitted its Liability, cementing on the One Time Settlement dated 18.12.2021, the same unequivocally, points out the factum, of Financial Debt, (as per ingredients of Section 5 (8) of the I B Code, 2016), which is due and liable to be paid by it, to the 1st Respondent / Bank / Financial Creditor, (as per Section 5 (7) of the Code) - The very fact that the Loan Account of the Corporate Debtor / Company, slipped into the category of Non Performing Asset, on 01.06.2019, in accordance with the guidelines of the Reserve Bank of India, the contra plea taken on behalf of the Appellant that the Default, took place before the Covid-19 Pandemic, is turned down, by this Tribunal. Admittedly, the main CP (IB) / 279 (CHE) / 2021, preferred by the 1st Respondent / Bank / Financial Creditor, under Section 7 of the Code on 27.10.2021, before the Adjudicating Authority / Tribunal. The Corporate Debtor s Loan Account, was declared as NPA, on 01.06.2019. As such, the main CP (IB) / 279 (CHE) / 2021, was filed well within the Limitation Period, by the 1st Respondent / Bank / Financial Creditor / Petitioner, and the point, is so answered. In the present case, it cannot be lost sight of that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y (Application to Adjudicating Authority) Rules, 2016, wherein, at Paragraphs 12 to 16, had observed the following: 12. "Heard the submissions made by the Learned Counsel for the parties. From the averments made in the counter, it is clearly seen that the Corporate Debtor has admitted its liability based on the OTS 18.12.2021 and the same clearly proves the existence of a 'Financial Debt' which is due and payable to the Financial Creditor. Further, it is also seen that the 'default' which is arising in the present Application has happened much before the advent of COVID-19 and the Corporate Debtor also cannot seek shelter under Section 10A of IBC, 2016. 13. Further, on the aspect of limitation, it is seen that the Corporate Debtor has committed default in repayment of the dues owing to which the Loan Account of the Corporate Debtor was declared NPA on 01/06/2019 and if the said date is taken into consideration as the date of default, then the present Application filed under Section 7 of IBC, 2016 before this Tribunal on 27/10/2021. 14. Thus, this Tribunal places on record the OTS dated 18.12.2021 amounting to Rs.84.81 crores and the Rejection effected by the Financial Credito ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation must be admitted unless it is incomplete, in which case it may give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating authority. Under sub-section (7), the adjudicating authority shall then communicate the order passed to the financial creditor and corporate debtor within 7 days of admission or rejection of such application, as the case may be. 30. On the other hand, as we have seen, in the case of a corporate debtor who commits a default of a financial debt, the adjudicating authority has merely to see the records of the information utility or other evidence produced by the financial creditor to satisfy itself that a default has occurred. It is of no matter that the debt is disputed so long as the debt is "due" i.e. payable unless interdicted by some law or has not yet become due in the sense that it is payable at some future date. It is only when this is proved to the satisfaction of the adjudicating authority that the adjudicating authority may reject an application and not otherwise. 16. In view of the facts as stated supra and also in view of the 'financial debt' which is proved by the Financial Creditor and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was mentioned in the 'Application', for 'Petition', as if, it is a 'Credit Facility', and if it is a 'Term Loan', 'Repayable in Instalments', over a period of time, the sum, said to be in 'Default', cannot be the whole amount. As such, the 1st Respondent / Bank / Financial Creditor, had failed to state the 'Actual Sum in Default', as well as the 'Actual Date of Default'. 8. The stand of the Appellant is that, the 'Term Loan', is repayable over 90 monthly instalments, beginning from April 2016 and entire 'Loan', will get 'Repaid', only in October 2023. Hence, on 01.06.2019, the Sum in 'Default', cannot not be Rs.107.48 Crores, at all. Even, as per the averment of the 1st Respondent / Bank / Financial Creditor's averment, the 'Loan Account', was running 'irregular', on 01.03.2019, and before that, there was 'No Default'. 9. The Learned PCS for the Appellant, brings it to the 'notice' of this Tribunal, that the 'Adjudicating Authority' / 'Tribunal', was guided probably by the 'OTS Proposal', dated 18.12.2021, which was 'rejected'. Besides this, the 'Adjudicating Authority', had not adverted to the contentions projected in the 'Counter of the Corporate Debtor', and had misconceived t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is a cutback, retained by the 'Sole Financial Creditor'. 17. According to the Appellant that the 1st Respondent / Bank, is fully secured by the 'Valuable Properties of the Company', as well as highly 'Valuable Personal Collateral Securities'. Furthermore, the 'Corporate Debtor', is operating with the 'Bank', one and only 'Bank Account', without any 'Diversion of Funds'. 18. On behalf of the Appellant, it is pointed out that when the 1st Respondent / Bank even now, had granted 'One Time Settlement', the only meaning is that, it does not deserve putting the Corporate Debtor into the gallows of the 'CIRP', because of the fact that the grant of 'OTS', and pursuing a 'Settlement', is completely antithetical, to 'Corporate Insolvency Resolution Process'. 19. The Learned PCS for the Appellant submits that the Corporate Debtor is a 'Going Concern', and in terms of the 'Financials and Valuations', it is commercially 'Solvent', and added further, on the 'Date of Non Performing Asset', there was 'no past due', and hardly one instalment was payable, as 'admitted', by the 'Bank', in its 'NESL Reporting', in May 2019. 20. The Learned PCS for the Appellant contends that the Corporate De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xercised with the condition that such discretionary power cannot be exercised arbitrarily or without any proper reason." 24. The Learned PCS for the Appellant, cites the Judgment of this 'Tribunal' dated 09.09.2022 in Comp. App (AT) (INS.) 993 of 2020 in Air Travel Enterprises India Limited, Kerala v. Union Bank of India, Kerala and three Ors., wherein, at Paragraph 20, it is observed as under: 20. "Be that as it may, for all the aforenoted reasons and having regard to the Written Submissions that efforts would be made to settle the matter, in the interest of justice and taking into consideration the fact that in this pandemic, the travel dependent sector, which is the core business of the 'Corporate Debtor', has more than suffered the negative impact of the crisis, this opportunity is being given to settle which could help mitigate the blow. We are also conscious of the fact that the 'Corporate Debtor' has settled the matter with Dhanlaxmi Bank, the Applicant of Section 7 Application in IA/06/KOB/2020 & IBA/41/KOB/2019 which was disposed of as withdrawn based on the settlement terms on 06.01.2020, during which period of pendency, this Section 7 Application was filed on 27.12.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t at Page 369 of Vol. II of the instant Appeal Paper Book (vide Diary No. 337 dated 26.04.2022), at Paragraphs 4 to 6, had averred that the funds were organised through Foreign Institutional Lender and 10% Conditional Amount was remitted by them, to the Account of the Respondent with the Applicant Bank on 16.02.2022 and that the Copy of the Remittance Certificate was enclosed, and further, the Copy of the email sent by the Investor SP Asset Management BV dated 21.02.2022, confirming the remittance and their readiness to pay the full and final settlement amount, once the 'One Time Settlement', was approved by the 'Petitioner / Bank'. 28. In addition to the above, in the Affidavit, of the Promoter of the Corporate Debtor / Appellant Mr. G. Balasubramaniam, at Paragraph 2 (vide Page 369 of the Vol. II of the Appeal Paper Book - Diary No. 337 dated 26.04.2022), had stated that the 'Final OTS Letter', was submitted by the Respondent, to the Applicant Bank, on 03.02.2022 and the Applicant / Bank, had replied to the said Letter on 09.02.2022, stating that the 'OTS Letter' of the Respondent, will be considered once the Petitioner deposits 10% of the Due Amount in the 'No-lien Account'. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 07.01.2021, but it proved futile. 35. On behalf of the 1st Respondent / Bank / Financial Creditor, it is brought to the fore, before this 'Tribunal', that the 'Corporate Guarantor' M/s. Shree Murugan Flour Mills (P) Ltd., had also individually, availed the 'Credit Facilities', from the 'Financial Creditor', and defaulted to repay the same and that the said 'Company', is also under the 'Corporate Insolvency and Resolution Process'. Status Report of the 2nd Respondent / RP : 36. The Learned Counsel for the 2nd Respondent / Resolution Professional of the 'Corporate Debtor', in his email dated 04.06.2022, addressed to the 'Corporate Debtor' / 'GBJ Hotels Pvt. Ltd.', had stated that 'no effective support is being received, from the Corporate Debtor's side', and further that, the updated books of accounts, were not received and inspite of repeated reminders, no attempts were made to furnish the same by the 'Corporate Debtor', and also that, an 'Application' (under Section 19 (2) of the I & B Code, 2016), was filed by the 'Resolution Professional'. 37. Furthermore, the 2nd Respondent / Resolution Professional, addressed to the 'Corporate Debtor' / 'GBJ Hotels Pvt. Ltd.', had mentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns : 46. In the instant case on hand, it transpires, that the 'Corporate Debtor' / 'Company', had approached the '1st Respondent / Bank' ('Financial Creditor'), for its business operations and that the 'Bank', had extended the following 'Credit Facilities', which are depicted, are as follows: Date Nature of Facility Limit 30/12/2011 Term Loan with sublimit of LC Rs.108 Crores 04/10/2017 Renewal of Term Loan Rs.100.64 Crores 04/10/2017 LG Rs.2.77 Crore 04/10/2017 Miscellaneous Cash Credit Rs.5 Crore 47. On behalf of the 1st Respondent / Bank, a reference is made to the Letter dated 12.08.2022 of Pressana Flour Mills (P) Ltd., addressed to the CEO and CMD of the Indian Overseas Bank, Chennai - 2, wherein, it is averred by the Managing Director of the Flour Mills that, 'we commit ourselves to settle OTS Compromise Amount due by GBJ Hotels Pvt. Ltd., within the time permitted by your goodselves', etc. 48. The Learned Counsel for the 1st Respondent / Bank / Financial Creditor, adverts to the Letter dated 09.09.2022 of 'Pressana Flour Mills Private Limited', addressed to the 'CEO and CMD of the Indian Overseas Bank', Chennai - 2, wherein, it is mentioned by the Directo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um', of 'Financial Debt', (as per ingredients of 'Section 5 (8) of the I & B Code, 2016'), which is due and liable to be paid by it, to the '1st Respondent / Bank / Financial Creditor', (as per 'Section 5 (7) of the Code'). 52. The very fact that the Loan Account of the Corporate Debtor / Company, slipped into the category of 'Non Performing Asset', on 01.06.2019, in accordance with the guidelines of the Reserve Bank of India, the contra plea taken on behalf of the Appellant that the 'Default', took place before the Covid-19 Pandemic, is turned down, by this 'Tribunal'. 53. Admittedly, the main CP (IB) / 279 (CHE) / 2021, preferred by the '1st Respondent / Bank / Financial Creditor', under Section 7 of the Code on 27.10.2021, before the 'Adjudicating Authority' / 'Tribunal'. The 'Corporate Debtor's Loan Account', was declared as 'NPA', on 01.06.2019'. As such, the main CP (IB) / 279 (CHE) / 2021, was filed well within the 'Limitation Period', by the 1st Respondent / Bank / Financial Creditor / Petitioner, and the point, is so answered. 54. In the present case, it cannot be lost sight of that the 'One Time Settlement', dated 18.12.2021, amounting to Rs.84.81 Crores was rejected, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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